UNITED NATIONS (CNN) -- The threat of sanctions has not convinced Iran to stop enriching uranium or to comply with demands that the Islamic republic prove its program is peaceful, a U.N. report said Thursday.

Thursday's deadline calls for Iran to comply with Resolution 1696 and end its nuclear activities or face the possibility of economic sanctions. The report by the IAEA paves the way for Security Council sanctions against Tehran.

Iran has insisted that its nuclear program is for peaceful civilian energy purposes. The IAEA could not confirm that, the report states.

U.S. Ambassador to the United Nations John Bolton cited the report as "ample evidence" that Iran was defying the international community.

The report "concludes that after all these years of trying, the IAEA is still unable to confirm the peaceful nature of Iran's nuclear program," Bolton said.

But a senior diplomat close to the IAEA said that does not prove Iran is trying to build nuclear weapons.

"Inspectors have not uncovered any concrete proof that Iran's nuclear program is of a military nature," the diplomat said. "At the same time, there is a standstill with regard to the resolution of outstanding issues which would clarify the peaceful nature of Iran's program."

Nuclear reactors that are used to produce electricity are fueled by a form of uranium enriched to a level that is lower than that used for nuclear weapons. Experts say thousands of centrifuges are needed to produce weapons-grade uranium.

Iran is using a cascade of 164 centrifuges to enrich uranium, the IAEA reported. Though the relatively small number implies Iran is not producing weapons-grade uranium, the agency says it still wants to know the origin of uranium traces found on some of the machines and what kind of research and development is being conducted. (How uranium is enriched)

The IAEA also has questions about traces of highly enriched uranium found in a waste-storage facility, and whether the Islamic republic is using P2 centrifuges, which are capable of enriching uranium more rapidly than other centrifuges.

The report also states that the IAEA is trying to obtain a 15-page report describing Iran's process of casting and forming uranium metal into "hemispheres." Experts say uranium metal must be cast into such shapes to form the core of a nuclear bomb.

The IAEA initially was allowed to review the document and take notes, according to the report. However, after a mid-August visit Iranian officials told inspectors they would not be able to analyze the report and destroyed the notes they had taken. The document remains under seal in Iran, the report states. (Watch how Iran is showing its defiance -- 2:58)

Bolton said this alone was evidence that Iran was pursuing nuclear weaponry.

"Apart from few very sophisticated uses for uranium metal by the most advanced nuclear programs in the world, the only real use for uranium metal is a nuclear weapon," he said.

Earlier in the day, Iranian President Mahmoud Ahmadinejad delivered a speech, vowing not to give in to Western interests.

"They should know that the Iranian nation will not yield to pressure and will not let its rights be trampled on," he said.

China and Russia -- both veto-wielding members of the Security Council -- have been reluctant to sanction Iran.

The passing of the deadline "does not mean that negotiations and talks are dead," said China's U.N. ambassador Wang Guangya. "I do hope that even after the passing of the deadline that we should talk to each other to find a way out."

Iran appeared unfazed by the threats.

Sanctions "cannot dissuade Iranians from their decision to make progress," Ahmadinejad said, according to Iran's state-run news agency. "On the contrary, many of our successes, including access to the nuclear fuel cycle and producing of heavy water, have been achieved under sanctions."

Iran has been under IAEA investigation since 2003. Inspectors have turned up evidence of clandestine plutonium experiments, black-market centrifuge purchases and military links to what Iran says is a civilian nuclear program, according to the agency.